X-Series analysis (Hutchison 3G)

After the YouTube/VZ deal posts … I was a little depressed 😉 But it looks like Marek@MEX has “kinda” brightened my day with this post on Hutchinson 3G’s approach. The important lines are that Hutchinson is a “greenfield” operator. This is not an incumbent trying this.

X-Series analysis, Nokia’s bit pipe, Sony Ericsson enabling web services & NFC initiatives: “

Three X-Series

Last week Hutchison 3G held a major launch event for its ‘X-Series‘ initiative, making a clear statement to the industry that it intended to turn away from convential price plans and its previously restrictive policies of limiting internet access. Instead, Hutchison will embrace an open access model across its Three networks, allowing users to pay a flat fee for accessing web services and removing the ‘garden walls’ which have prevented subscribers from visiting web pages outside the operator portal.

While certain operators around the world have already been flirting with a similar model – T-Mobile with its Web ‘N’ Walk, for instance – Hutchison has scored a marketing coup by trumpeting its plans as a key strategy change. As a ‘greenfield’ operator with no legacy business to canabalise and a network rich in capacity, it can afford to embrace a new approach to pricing and service delivery without the same fear of investor backlash that constrains the likes of Vodafone, Orange and other operators who have large institutional shareholders.

More importantly, it has also lined up a dream team of partners to deliver popular web services for the X-Series: Yahoo, Google, Microsoft, eBay, Skype, Sling Media, Orb Networks, Nokia and Sony Ericsson. To quote Three, the X-Series represents: ‘TV, home PC and all the best of the web on your mobile.’

It is no small feat for Hutchison to have brought all of these partners, often competitors in their own fields, to the same table. This has been achieved because Three has worked closely with them to ensure they can provide a user experience which is integrated with their existing businesses, familiar to users and priced sensibly – i.e. flat fees for unlimited monthly usage.

While many operators in the mobile industry are still relying on the size of their customer bases and their ownership of the billing relationship to ensure long-term growth in data services, Three has woken up to the uncomfortable truth: it doesn’t matter how many voice and text customers you’ve got if you’re not capable of marketing new services to them. Companies like Google and Skype have active networks of passionate subscribers who rely on their data services. As such, they are an incredibly powerful ally in building a mobile data business. Quite simply, customers are more likely to want to mobilise their existing services than commit to new offerings from an operator they associate with voice calls.

The result will be two-fold: Three’s approach will attract the savvy, active data users who are keen to extend their digital lifestyle applications into the mobile envirionment. In doing so, it will be able to leverage network effects to cross-sell additional services to these customers and increase basic communications usage. Secondly, Hutchison will potentially change the dynamics of its revenue stream. Voice and text will become true commodities and the flat-rate subscription pricing for data services will allow it to break the ‘25 percent’ ceiling which seems to cap data as a proportion of revenue for most other operators.

It was interesting to see Hutchison taking this approach just a couple of weeks after my article entitled ‘Why value is slipping away from the operators‘. I have since had private conversations with several major European carriers who are looking closely at their long-term role in the industry and how they can profitably evolve from service provider to service enabler. This will be a major theme at our next MEX conference in May 2007 – now is the time to get in touch if you’d like to be involved in the debate.

I truncated here…. Go to original for remaining part of post on Nokia and Sony Ericsson products

(Via MEX – the strategy forum for mobile user experience.)


YouTube & Verizon V-Cast Articles

Here are the links to the NY Times article on YouTube & Verizon and some commentary. My favorite commentary is Om Malik’s Walled Garden, Not Going Away. It’s like a shot in the gut for me 😦 I keep searching for the slippery slope of wireless internet to begin its change to look like the horizontal wireline internet. But this deal shows that horizontal wireless may be far far far far away. Wireless operators are protecting their “network hardware” investment very well.


Also, I just can’t imagine spending $15/month for this. But Kedrosky had a post a few months ago with some data indicating that most “new” wireless services were subscribed to by teens & university students whose parents paid. So it has a market 😦 … sooooo Lame.

  • YouTube Coming Soon to Cellphones – NY Times – Matt Richtel
  • Lame (A VC)
  • Better Options than Verizon-YouTube Lite (giga om)
  • My favorite
    Walled Garden, Not Going Away – GigaOm

    Fred Wilson’s assessment of the YouTube-Verizon Wireless deal is spot on. The limited amount of YouTube inventory over Verizon wireless network and devices, “violates the entire ethos of YouTube, not free, not open, exclusive, no community, limited, censorship, etc, etc.” The likelihood of such a deal has been talked about for a while.

    Despite Verizon network’s superior quality, I refuse to subscribe to them, because their (deck) interface, regardless of the phone, is the mobile equivalent of Chinese water torture.
    The thought that Verizon would decide what YouTube video gets shown on the mobile makes me shudder. (For better options, we have some recommendations for you, which are more fun, to say the least.)

    Steve and Chad need to answer one more question: Verizon is making money from the network; YouTube is likely profiting from this deal, but are they sharing the goodies with folks whose videos will end up on Verizon handsets?

    The agreement shows that the wireless carriers will continue to maintain an iron-fist like control over their networks; showing the cunning of a Night Club bouncer, deciding when and who is allowed to cross the velvet rope. When a brand as big as YouTube has to fall on its knees and play ball with Verizon (on carrier’s terms), what chance do others have?

    Frankly, that is not going to change. The utopians are looking at 3 X-Series as a sign of a revolution, though in the end it might be a simple mutiny by a company, whose financial quandary might have something to do with its decision to break ranks with the global mobile oligopoly.

    The Silicon Valley folks have complained bitterly about this exclusive strategy. “I think it’s inevitably just a matter of time before general IP and open protocols get to mobile phones,” Reid Hoffman, CEO of LinkedIn said at a recent event at Oxford University’s Said Business School. “I think a lot of people in Silicon Valley are agitating to work out ‘how do we take the dam down faster?’”

    Others like Matt Cohler of Facebook and Chris Sacca of Google expressed similar frustration, but complain as they may, in the wireless world their network neutrality, open network argument is not going to fly. Given the billions of dollars they spent on spectrum, and building those networks, carriers want to milk their profit machine as much as they can.

    The walled garden will remain just that – albeit with heavily barred windows.


Social Media is not Mass Media

  • This is fairly “dense” point on the future of online advertising.
  • The take-away for network hardware vendors is that will be a significant source of cash to pay for non-telco style networks
  • Focussing solely on telco-style hardware could mean missing out on this future gravy train.

Social Media is not Mass Media: “

Following our piece yesterday about the continued growth of online advertising, let me add to Om’s practical perspective with my own take on where I believe the opportunity lies for those who are set on capturing some of those future ad dollars. What I’m about to say should be very obvious to most by now, but I believe it bears repeating.

Putting aside the issue of whether or not online ad spending will consistently grow unabated for the next 20 years, it’s safe to say that the total pie will be much bigger 10 to 20 years from now. That said, I firmly believe it is equally reasonable to assume that a big chunk, if not a majority, of future ad spending will go into online ad models & formats that do not yet exist. The big reason for this, in my mind, is due to the emergence of social media… and the fact that social media is not mass media.

As I have already written much about, social media is a new medium in its own right. As such, successful commercial exploitation of this new medium requires the development of new business/advertising models. This has been true for every other new medium that has been adopted at large scale throughout history. Yet, unlike mass media before it, social media introduces the very unique element of the previously passive audience becoming both producers and distributors of media. From a marketing perspective, this means that the people themselves will necessarily have to become an integral part of the brand communication strategies and processes.

Now, couple what I just mentioned with the prospect that the majority of future ad spending growth will come from traditional brand advertisers that, up until now, dominated traditional media budgets (e.g. TV & cable, radio, newspapers & magazines, etc.). But here’s the real quandary… while it’s easy to reallocate budgets, these brand advertisers face a problem because they cannot simply transport their traditional ad models (optimized for mass media) to the new world of social media. Further exacerbating the problem is the fact that even today’s dominant interactive ad platforms, like Google’s highly efficient AdWords/AdSense system, or Yahoo’s display ads, do not extend naturally into the social media space.

What this all boils down to is a growing and substantial market need for new ad models and platforms. Granted, there’s a good chance that the dominant players of today, like Google and Yahoo, will end up being the ones to develop the new models. But I’m an optimist, in the entrepreneurial sense… I believe it’s far more likely that new players will develop such innovative platforms. After all, 5 years ago, Google wasn’t even a player in online advertising.

Put another way… 10 years from now, my bet is that a substantial and material share of the huge online advertising pie will be captured by players we do not know of today. The real challenge, as famed author and management guru Geoffrey Moore points out, is to develop marketing solutions that are highly scalable for social media. I agree, and I also agree that such solutions are not in the marketplace today. But while Moore doubts there will ever be scalable solutions for social media, I on the other hand believe it’s a problem that actually has several fundamental solutions… many of which will start coming to market in 2007.

(Via GigaOM.)

Who Wants to Be a Virtual World Millionaire?

  • Notes
  • ok ok this has nothing to do with chips … but this is just way too much fun 🙂
  • Long live the “open net”…. Read on.

Who Wants to Be a Virtual World Millionaire?: “

So, it’s semi-official: the Second Life avatar known as Anshe Chung, featured in a recent BusinessWeek profile of SL, is now worth over $1 million dollars. The news has already stormed through the blogosphere (as here, here, and first scooped here), but judging by most of the commentary, it’s provoking more confusion than understanding.

Did she become a millionaire through hacking, a pyramid scheme, or virtual gold farming (as most Internet commentators seem to think)? And does she really have more than a million dollars in Second Life-based assets (as Ailin and Guntram Graef, the German couple who own the Anshe character, claim)?

No, no, no, and finally, yes and no.

After the break, some clarification that hopefully cuts through both the hysteria and the hype.

How the Virtual World Works

To understand how the Graefs can make the claim, you have to understand both the revenue model of Linden Lab, the company that owns SL, and the revenue model of Anshe Chung, virtual real estate developer. Briefly:

Unlike other online worlds, Second Life has no monthly subscriptions- instead, if you want to own virtual land for a home, a business, or other project, you pay Linden a monthly land use fee, based on the amount of acreage in your account (from $5/month up). For the most ambitious subscribers, Linden also sells private islands of 16 acres each, which they can buy outright from the company for about $1600, while paying a monthly land use ‘maintenence’ fee of several hundred dollars. (Each island is actually a single server; in fact, think of Second Life land as analogous to renting out server space for a website or file storage or whatever- it’s just that in SL, the data is represented in 3D.)

Over the last few years, Anshe Chung and her growing staff have been buying up Second Life land, acquiring private islands, and after rezoning and beautifying it, subletting it out to other SL players. (Often this involves sharp elbows, imposing strict building codes, or sudden evictions of long-standing communities* [see Update below], which is why Anshe is, like most real world land developers, a controversial figure in Second Life.) Anshe’s tenants pay her in Linden Dollars, the official currency in SL, which can then be bought and sold for real money over the LindeX, the company’s web-based commodity exchange market.

All of this is done with the explicit approval of Linden Lab, part of their business plan to foster a self-sustaining, user-created world where the top content creators and service providers like Anshe profit from their efforts. And while there are other successful SL real estate developers, Anshe’s enterprise is by far the largest; most of her private islands are linked together to form an entire continent which makes up, by recent estimates, 10% of the world’s total landmass.

Breaking Down a Million

All that in mind, you can now guess the hidden and semi-hidden caveats around the million dollar claim. To begin with, only part of it is based in actual Linden Dollars. ‘Anshe has ‘cash’ holdings of several million Linden Dollars’, her company announcement reads. If ‘several’ meant L$3,000,000, that would be around $12,000, at market rates, which are now around L$250/US$1; still, even converting this currency to US dollars would mean selling it on the open market, and to have such a large bloc of cash hitting the LindeX currency exchange would surely devalue it.

The ‘millionaire’ claim is primarily based on the stated value of Anshe Chung’s 550 islands, with a baseline price (when it’s first sold by Linden Lab) of $1675, meaning $921,250 total. But again, to sell all of those regions to other SL subscribers at that rate or higher, without devaluation setting in, would be a monumental task.

To make things even more complicated, CNN’s legal affairs blogger (and isn’t it surreal to cite that source for a story on a virtual world?) reports that ‘[a] spokesperson for Linden Lab told me she could not immediately verify Chung’s claim, because Chung’s property is held in many different names’- in other words, a single avatar is not, in fact, a millionaire. (Anshe’s SL real estate operation has numerous employees on staff.)

So all that established, a more accurate statement would be this:

If Anshe Chung gradually sold all her Second Life assets over a long span of time (to prevent market devaluation), and if all the assets actually owned by various avatars working for Anshe were successfully transferred back to her, and if the internal economy remained stable, and if Second Life had no serious interruptions of service through hacking, scalability failures, sale of the company, or other unforeseen incidents, then after a long and arduous process, Ailin Graef and her husband would have well over $1,000,000.

That’s a long way off from being a virtual world millionaire.

In fairness, the Graefs’ reasoning is not all that different from real world millionaires, whose own assets depend on the stability of the global economy. But ultimately, the Graefs’ claim is most analagous to the boasts made by stock option millionaires of the dot com boom. In effect, they own ‘shares’ of a user-created world which are valuable only as long as current market conditions hold up. As we know from painful experience, those conditions often change, and drastically.

But for their sake- and frankly, mine– I hope Second Life’s boom times never end.

*Update, 1:58am: At Ailin Graef’s request, a clarification: the eviction mentioned in the linked article was not conducted by Anshe Chung or her associates, but by the previous owner of an island, who disbanded the existing community there in preparation to sell it to Anshe.

(Via GigaOM.)

The Hype Around WiFi Phones

The Hype Around WiFi Phones: “

This morning there is a lot of talk over The New York Times story, The Air Is Free, about the coming onslaught of WiFi handsets and how people can make calls piggy backing on open wireless connections. The WiFi phones sound so cool, but many forget that what is cool, is not always that functional.

The consumer experience on these devices remains horrible, and logging onto a WiFi network remains as much a mystery as the Chicago Cub’s decision to give a $136 million contract to Alfonso Soriono. We have tried most of the new WiFi phones, and despite being ten feet away from the access point, have run into serious problems. Similar challenges crop up when using dual mode cellular phones such as the E61.

WiFi, is a bit of a black magic really, and even on laptops, one is challenged constantly to stay connected. It is good to see that there are others who are equally concerned about the consumer experience, though others are happy with the prospect of disruption. Of course, no one doubts the potential and the disruptive nature of these devices, but the hype needs to be tempered with reality. Other wise you are merely setting up phone buyers to be disappointed.

Additional reading: #1 Earthlink , #2 DLink, #3 VOIP silos.

(Via GigaOM.)

Battle of the RSS Newreaders – My Experience So Far

I’ve been using My.Yahoo for over a decade. It’s very familiar and I often get lazy trying out alternatives. Yahoo was one of the first to incorporate RSS and I liked it. But in the past year, I’ve been really digging into the web for news and blogs. About 6 months ago I decided to investigate the other options because so many “net workers” were mentioning that there were significantly better alternatives.

Here are my rankings of tools that I’ve tried.

1. Newsgator products – http://www.newsgator.com/Home.aspx

  • if you spend 1+ hours a day reading news on the net — this is the best option I’ve found
  • Newgator has desktop and online tools.
    • for PC (FeedDemon) & Mac ( I use the mac versions NetNewsWire and MarsEdit).
  • Q. Why do you need desktop & online? — A. The analogy is e-mail
    • if you read a little, then the online tools are fine.
    • if you read a lot, then a desktop application that synchronizes with the online version is soooo much better.
  • As with anything really good… this actually cost $$( ~$30)
  • The online tool is free and there is a feature reduced free desktop
    that I haven’t tried.

2. Google Reader – http://www.google.com/reader/

  • Google has done a great job of getting their online tool to have all
    the good features of Bloglines and Newsgator

3. Netvibes www.netvibes.com

  • This is fun! It’s got “Joie de vivre!”
  • It is different ( based in France … don’t worry targeted audience is English speaking).
  • If you use Newsgator or Google Newsreader you’ll probably want to use this as well.
  • the open API ecosystem makes this a —– beautiful time waster 🙂

4. Bloglines — http://www.bloglines.com/

  • I was a satisfied Bloglines user for about 6 months and then I
    eventually tried Newsgator Products.

    • the desktop client was the clincher in my switch to NetNewsWire (Newsgator), I loaded the 30
      day demo and never looked back from day 1.
  • If you’re already a Bloglines user there is no reason to change to any of the above unless you want a desktop client as well.
  • If you’re not a bloglines user already, move on.
  • Overall, I feel sorry for Bloglines because it is a great product that Google has pretty much matched feature-for-feature over the past year.
    • there is little reason to stick with the little guy 😦
    • especially if you’re using Google’s homepage.

5. Yahoo. Rss

  • Is okay for casual use.
  • for work purposes
    • there is no point bad mouthing this….. just switch to any of the above immediately.

What A Return :-(

I got back from last week’s awesome meditation retreat to a snow storm hell zone 😦

Today I woke up to trees down all over our yard. Snow bending everything in bizarre directions, of course this cool landscape included ripped out cable and phone lines. Luckily the power was on. Then oops it went out and now we’re entrenced at a friends house.

From Bliss to hell.

I should be back sometime this week.